Corporate & Commercial

Question:  Can my lender call my loan that encumbers my land if I transfer the land to an LLC I own?
Answer:  Probably not.  The Federal National Mortgage Association, aka Fannie Mae, has something called Servicing Freddie Mac Mortgages Series 8000.  Section 8406.4(b) Additional permitted Transfers of Ownership Effective 10/20/2021 states:
“Permitted Transfers of Ownership subject to conditions.  In situations where all of the following conditions are met, Freddie Mac will permit a Transfer of Ownership of the Mortgaged Premises:

  • At least 12 months have passed since the Origination Date and
  • The transfer is to a limited liability company (LLC) or limited partnership (LP), provided

Continue Reading Loan Can’t be Called if Land Is Transferred to an LLC

Question:  Did you file my LLC as partnership? My tax accountant needs this information and a copy of that document.
Answer:  You need to get a new accountant who understands LLCs and federal income tax law. It is not possible in any state to file an entity (corp or LLC) as a partnership for federal income tax purposes. The IRS’ default tax method for a multi-member LLC like your two member LLC is partnership. No need to file any papers with the IRS other than the LLC’s IRS form 1065, which is its partnership tax return. If the LLC wants
Continue Reading Did Your File My LLC as a Partnership?

A business partnership or limited liability company is a go-to for many entrepreneurs or experienced business owners. They say, “Two heads are better than one” and are not wrong. More people mean more resources, knowledge, experience, and ideas. But what happens when not everybody agrees to the same ideas? That is when disputes arise.
Common sources of partnership disputes
Breach of fiduciary duties
Breach of fiduciary duty occurs when a party is responsible for acting in the interests of another but fails to do so or does so dishonestly.  An example would be if a manager of an LLC diverts
Continue Reading What should you do in case of a partnership or member dispute?

President of an Arizona nonprofit corporation I formed recently called while at the bank trying to open a bank account for the corporation.  The corporation filed IRS form 1023EZ and was a 501(c)(3) tax-exempt charity.  The banker said her bank could not open a bank account until the corporation could prove its “tax classification.”  I asked her what she meant by “tax classification” and she said it means is the corporation a C corporation or an S corporation?  I said neither because it is a 501(c)(3) tax-exempt charity.  She insisted the corporation had to be a C or an S
Continue Reading Another Wells Fargo Idiot Banker

Question:  If my Arizona LLC is called Widget World, LLC and I want to use Best Widgets in my LLC’s advertisements do i need to file a DBA with Arizona?
Answer:  DBAs in AZ are called trade names.  If you use text that is not the full name of the LLC you should register that text as a trade name with the Arizona Secretary of State.  Getting a trade name or dba from the Arizona Secretary of State is relatively easy to do. It’s a simple online application and the fee is $10. To learn how to get the trade name
Continue Reading Should I Get a DBA for My Arizona LLC?

The Minnesota legislature has passed a bill aimed at combatting the dissemination of “deep fake” videos and images. The bill was passed 131 to zero and is expected to be signed into law by Governor Walz within days. Anticipating what is expected to be an explosion in the use of artificial intelligence (“AI”) to create […]

A bill to ban non-compete agreements in Minnesota passed the last conference committee hurdle today and is expected to be signed into law by Governor Walz as Minn. Stat. Section 181.988. The law will become effective on July 1, 2023, and will apply to contracts and agreements entered into on or after that date.  The […]
Continue Reading Minnesota Non-Compete Ban Passes Last Hurdle, Expected to be Signed Into Law

Will Minnesota ban non-competes? The legislative session ends May 22. Regardless of what happens, V. John Ella will be speaking on a panel along with Joel Andersen and Katie M. Connolly from the Nilan Johnson law firm at the 2023 Upper Midwest Employment Law Institute on the topic: “Non-Competes, Non-Solicits, and Other Restrictive Covenants – […]
Continue Reading TMB Shareholder V. John Ella to Speak on Non-Compete Reform at Upper Midwest Employment Law Institute

Question:  I received a letter from Wells Fargo bank that said my new LLC’s principal address on file with the Arizona Corporation Commission cannot be 24 W. Camelback Rd, #467, Phoenix, AZ 85013.  That address is your address that our LLC uses only for Arizona Corporation Commission purposes.  Do I have to amend my LLC’s Articles of Organization to change the LLC’s principal address?
Answer:  The 24 W. Camelback Rd, #467, Phoenix, AZ 85013 is a UPS mail box. You are dealing with an idiot banker who is telling you that your LLC cannot have its principal address be a
Continue Reading Well Fargo Bank Demands LLC Change its Principal Address

Question:  I own a rental home that I want to put into an LLC for asset protection, but it is subject to a deed of trust that has a due on sale clause in it.  If I form an LLC and convey the home to the LLC will the lender exercise the due on sale clause and demand I pay off the loan?
Answer:  A due on sale clause is text in the deed of trust that says that the lender can demand payment of the balance owed on the loan if the borrower transfers ownership of the land.  This
Continue Reading Will My Lender Call My Loan If I Convey Land to My LLC?

Question:  What is a verified LLC phone number?  I tried to open a bank account for my LLC at Chase Bank.  The bank clerk said that he could not open a bank account for the LLC unless he could “verify” the LLC’s phone number.  My client who is the sole member and manager of the LLC gave the banker all of his phone numbers.  The banker was unable to verify any of the phone numbers and declined to open a bank account for the LLC.
Answer:  I don’t have a clue what a verified phone number is.  In forming 8,700+
Continue Reading Chase Bank Refused to Open LLC Account Because It Could Not Verify LLC’s Phone Number

Question:  You setup an LLC for me that is owned by a revocable living trust you created.  I gave the bank a copy of the Articles of Organization, the Operating Agreement, the Trust Agreement and the Certification of Trust, but the bank won’t open an account for the LLC unless you send the bank a letter that says that I am the trustee of the trust that is the member of the LLC?
Answer:  You are dealing with an idiot banker because he/she wants somebody who is not an owner of the LLC or affiliated with the LLC, i.e., me, to sign
Continue Reading Idiot Banker Won’t Open a Bank Account for an LLC Owned by a Trust